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American Arbitration Association introduces optional appellate review

21 November 2013
On November 1, 2013, the American Arbitration Association (“AAA”) introduced a new set of optional rules that provide for appellate review within the arbitration process. Under the Optional Appellate Arbitration Rules (“Appellate Rules”), an appellate tribunal may conduct a more comprehensive review of an arbitration award than the judicial confirmation process provided by existing federal and state laws in the United States. An appellate tribunal may examine an award for material and prejudicial legal errors and for clearly erroneous factual determinations. Appellate review is available only where the parties have agreed to the new rules, either by contract or stipulation.

The AAA designed the Appellate Rules for “large, complex cases where the parties think the ability to appeal is particularly important.”  The AAA states that the Appellate Rules aim to provide for “high-leveled review” that is “consistent with the objective of an expedited, cost effective and just appellate arbitral process.”

The Appellate Rules are available at: http://go.adr.org/AppellateRules.

The AAA estimates that appeals under the new Appellate Rules can be completed within three months. The appellate tribunal will consist of three arbitrators selected from the AAA’s roster of former judges and arbitrators with strong appellate backgrounds, unless the parties agree to have a single arbitrator or elect to select their own arbitrators by agreement. Following the constitution of the appellate tribunal, both parties may submit appellate briefs.  The appellate tribunal will entertain oral argument only if it deems it necessary.

If the appellate tribunal finds either a material and prejudicial error of law or a clearly erroneous factual determination, it may replace or adjust the underlying award. The appellate tribunal’s decision serves as the final arbitration award for any judicial proceedings the parties thereafter initiate. The parties’ election to use the Appellate Rules and participation in the appellate process will not constitute waiver of the right to seek judicial enforcement.

With these new rules, the AAA is attempting to respond to a perceived desire for more searching review of arbitration awards. It will be interesting to see the extent to which parties seeking arbitration choose to take advantage of the Appellate Rules and whether other arbitration institutions choose to offer similar procedures.

Cristina M. Rodrigues

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